The Last Line of Defence:

Why Marketing Budgets Are the First to Be Cut and the Costliest to Lose.

The Canary in the Coal Mine.

There is a pattern that anyone who has worked in or around marketing will recognise: the moment a business faces financial pressure, whether from slowing revenue, rising costs, or broader economic headwinds, the marketing budget is often the first item on the chopping block. It is treated less like a business-critical investment and more like a discretionary expense, something to be trimmed when things get tight and restored when conditions improve.

This has been observed repeatedly. Clients arrive with ambitions to scale, to build a national presence, to grow their customer base, and they arrive with budgets that bear no relationship to those ambitions. A retail business allocating $50 a month to digital advertising. An organisation seeking to grow whilst dedicating a mere $1,000 monthly budget from a $180,000 annual revenue to its digital marketing. These are not outliers. They represent a widespread, deeply embedded misunderstanding of what marketing is, what it does, and what it is worth.

Is Marketing the First to Go? What the Evidence Says.

Are marketing budgets disproportionately targeted during periods of organisational contraction?

The data is unambiguous on the trend, even if the reasons for it are contested. According to Gartner’s 2024 CMO Spend Survey, one of the most authoritative annual benchmarks in the field, average marketing budgets have fallen to 7.7% of overall company revenue, down from 9.1% in 2023. To contextualise that figure: just four years before the pandemic, marketing budgets averaged 11% of revenue (Gartner, 2024). That is a decline of nearly one-third in less than a decade.

“CMOs are living in an ‘era of less.’ In the four years preceding the pandemic, average marketing budgets were 11% of overall revenue.” — Ewan McIntyre, VP Analyst, Gartner (2024)

The World Federation of Advertisers (WFA), surveying 43 multinational companies in late 2022, found that nearly 30% of major advertisers were planning to cut their advertising budgets into 2023. More revealingly, 75% of respondents reported that their budgets were under “heavy scrutiny”, regardless of whether cuts had yet been made — a figure that captures the precariousness of the marketing function’s position even when the axe has not yet fallen (eMarketer, 2023).

An analysis from Digiday framed the dynamic with characteristic bluntness: advertising is, in accounting terms, a variable cost that can be quickly halted. In prolonged downturns, it is almost always cut, because it produces no immediate liability if paused. Deloitte’s quarterly CFO survey found that over half of chief financial officers had shifted to defensive strategies, with cost reduction as their top priority, and advertising tends to feature prominently in cost reduction exercises (Digiday, 2022).

It is worth noting, however, that this is not a uniform picture. Larger, well-resourced organisations have in many cases held their nerve. Marketing Week reported in early 2023 that a net balance of 24.2% of firms expected marketing budgets to grow in the 2023/24 financial year, suggesting that the cuts are concentrated in smaller businesses and less resilient organisations (Marketing Week, 2023). The story is not that all companies are cutting, it is that the companies least equipped to absorb the consequences of cutting are the ones most likely to do so.

Why Marketing Gets Cut: The Logic and Its Limits.

The Visibility Problem.

To understand why marketing is so often first to be sacrificed, one must understand how it is perceived, particularly at the C-suite and board level. Sales is legible. A product is sold, money is received, a transaction is recorded. The causality is direct and the accounting is clean. Marketing, by contrast, operates across a timeline that often exceeds the reporting quarter. It builds awareness before a purchase is contemplated. It shapes perception before a decision is made. It retains customers long after a sale has closed.

This temporal gap between investment and return is the source of marketing’s political vulnerability. When a board is looking for budget lines to cut, it naturally gravitates towards those where the immediate impact of reduction appears minimal. Marketing, which often produces its most significant returns over months or years, appears to fit that description, at least in the short term.

The irony is that this is precisely the logic that the evidence most powerfully refutes.

The Short-Termism Trap.

The Institute of Practitioners in Advertising (IPA), drawing on analysis from the Profit Impact of Marketing Strategies (PIMS) database, has produced some of the most robust longitudinal evidence on this question. Their findings, presented at an IPA conference in 2008 and borne out by subsequent research, are unambiguous: brands that cut their marketing budgets relative to competitors during downturns do enjoy improved short-term profitability metrics. But that improvement comes at a steep long-term cost (IPA, 2008).

The PIMS analysis found that brands which went “dark”, ceasing communications spending for six months or more, saw brand usage decline by 13% and brand image decline by 6%. Sixty per cent of brands that went dark saw at least one key relationship metric deteriorate after just six months. And when spending resumed after the downturn, the risk of failure was significantly elevated, because the ground that had been conceded to competitors was not easily reclaimed (IPA, 2008; Marketing Society, 2008).

“Cutting ad budgets — relative to competitors’ spend — in a recession undermines companies’ ability to grow future market share and profits.” — IPA Analysis, referenced in Marketing Week (2022)

The McGraw-Hill Research analysis of 600 companies between 1980 and 1985 found that those which maintained or increased their advertising spend during the 1981 recession had sales 256% higher than those which did not, by 1985. The companies that cut had not merely missed an opportunity; they had paid a lasting structural penalty (Nova, 2020).

Marketing Is Not a Cost Centre. It Is the Foundation.

There is a conceptual error that underlies much of the mismanagement described above, and it is worth naming directly: the treatment of marketing as a cost centre rather than an investment.

McKinsey & Company has argued consistently, and their advisory work across consumer goods, financial services, telecommunications, and retail supports this, that companies which view marketing as a capital investment rather than an operating expense fundamentally change the quality of decisions they make about it (McKinsey & Company, n.d.). The question ceases to be “how much can we cut?” and becomes “what is the return on this investment, and how do we optimise it?”

The return is demonstrable. Research from Kantar found that between 2019 and 2021, brands with growing brand equity increased their brand value by 72%, compared to just 20% for those with declining equity (Kantar, cited in The Branding Journal, 2024). Analysis by Analytic Partners found that brand marketing outperforms performance marketing 80% of the time, and that upper-funnel tactics, the kind of work that builds awareness and emotional connection over time, are 60% more effective in the long term (Analytic Partners, cited in Trace Brand Building, 2025).

Interbrand’s cumulative analysis of the world’s top brands estimates that the global shift towards short-termism has cost the Best Global Brands an estimated $3.5 trillion in unrealised brand value over recent decades, with $200 billion in unrealised revenue potential in the past twelve months alone (The Branding Journal, 2024).

The IPA’s ThinkLong research puts it plainly: brands which maintain or increase advertising spend during a recession experience double the growth in share compared with those that reduce investment. Even simply to maintain current market share, brands must never stop investing in communications (IPA ThinkLong, n.d.).

What Marketing Actually Does.

It is worth being explicit about what is being surrendered when marketing investment is withdrawn, because the full scope of the function is frequently underestimated.

Marketing encompasses market research, the systematic inquiry into the size, stability, and dynamics of a market; the identification of customer pain points and buying behaviours; the assessment of competitive intensity and supplier power; the evaluation of price elasticity and economic sensitivity. Without this, organisations make product decisions, pricing decisions, and distribution decisions in the dark.

Marketing encompasses brand strategy, the deliberate construction of perception, positioning, and emotional resonance that allows a business to command a pricing premium, attract and retain customers at lower acquisition cost, and build the kind of loyalty that insulates a brand from competitive pressure. Research by David Aaker and Robert Jacobson found that the impact of brand equity on stock return is approximately 70% of the impact of accounting return on investment, a figure that should give any CFO pause (Prophet, 2015).

Marketing encompasses the entire customer journey, from the moment a potential customer first becomes aware that a problem exists, through the evaluation of solutions, to the point of purchase and beyond. Sales closes the transaction. Marketing creates the conditions in which the transaction becomes possible.

The Exception That Proves the Rule: On Luxury Brands and the Limits of the Argument.

Any honest treatment of this subject must acknowledge the exceptions, organisations that have, in fact, succeeded on minimal conventional advertising. Lamborghini is often cited in this context, and the citation is instructive, though perhaps not in the way it is typically intended.

Lamborghini does not run television commercials. The brand’s position is that its target audience, ultra-high-net-worth individuals, is not watching commercial television, and that mass-media advertising would, in any case, undermine the exclusivity that is central to the brand’s value proposition. To be seen by everyone is to be desired by fewer of the right people (LamboCars, 2023; YourStory, 2024).

But this is not a case of a company that does not market. Lamborghini invests substantially in experiential marketing, the Lamborghini Academy driving programme, exclusive factory tours, VIP events, as well as in digital platforms, carefully curated social media content, strategic partnerships, and a dedicated owner application, “Lamborghini Unica,” that creates an ongoing digital relationship with existing customers (Marketing Explainers, 2025). Lamborghini markets; it simply does not do so through mass channels, because its market does not require mass channels.

The lesson here is not that marketing is optional for luxury brands. It is that marketing strategy must be calibrated to the market being served. Lamborghini’s “stealth marketing” is itself a profoundly deliberate strategic choice, and one that requires sustained investment, deep customer insight, and sophisticated execution (The Brand Hopper, 2024).

A handful of other exceptions exist. Companies with such dominant market share and such deeply embedded brand equity that they have, in effect, become category synonyms, Coca-Cola’s name recognition, Google as a verb, Hoover as a product type, can, at certain stages of their development, reduce communications spending without immediately suffering in the market. But even these organisations typically discover, eventually, that brand equity is not a permanent endowment. It depreciates. It requires maintenance.

The broader principle remains intact: these are exceptional cases, and the conditions that make them possible, extraordinary brand equity, a deeply captive market, ultra-niche customer bases with high willingness to pay, are not available to the vast majority of organisations. Most businesses are not Lamborghini. Most businesses operate in competitive markets where visibility and relevance must be continuously earned.

The Consequence of Under-Investment: A View From the Consulting Room.

The abstract argument above has a lived dimension that is worth naming. As a marketing strategist working with clients across sectors, the gap between marketing ambition and marketing budget is something I encounter repeatedly, and the friction it produces is not merely operational. It is strategic, ethical, and ultimately self-defeating.

A digital advertising budget of $50 per month is not a marketing strategy. It is a gesture, one that occupies the language of marketing without any of its substance. The minimum viable digital advertising investment to generate meaningful return in most markets requires budgets an order of magnitude larger. A non-governmental organisation seeking national scale with $1,000 dedicated to digital marketing is not under-resourced; it is, in practical terms, invisible.

The consequences fall on multiple parties. The organisation does not achieve its objectives. The consultant is placed in an impossible position, asked to perform transformation with the tools of triage. And the broader credibility of marketing as a discipline is damaged, because when under-resourced campaigns inevitably underperform, the conclusion drawn is not that the investment was insufficient, but that the marketing did not work.

This is the dynamic that perpetuates the problem. Marketing is under-funded, fails to produce expected results, and is consequently under-funded further. The cycle is not evidence of marketing’s ineffectiveness. It is evidence of a systemic failure to understand what marketing investment requires.

What Adequate Investment Looks Like.

There is no universal answer to the question of how much to spend on marketing, it varies by industry, stage of growth, competitive environment, and strategic objective. But there are benchmark frameworks that provide meaningful orientation.

The IPA’s analysis, drawing on the work of Les Binet and Peter Field, recommends that, for most organisations, approximately 60% of the marketing budget should be allocated to long-term brand building and 40% to short-term sales activation. Most organisations today already spend less than 50% on brand building, placing them below the threshold at which brand equity can accumulate effectively (IPA/LinkedIn Business, 2020).

Gartner’s 2024 CMO Spend Survey places average marketing spend at 7.7% of company revenue across large organisations. The U.S. Small Business Administration recommends that businesses with revenue under $5 million allocate between 7% and 8% of revenue to marketing. For high-growth sectors and businesses in early-stage brand building, 10–20% is not uncommon.

For digital advertising specifically, the investment required to generate meaningful results has increased substantially as platform competition has intensified and organic reach has declined. A starting point for META advertising of $500 – $1,000 USD per month provides the minimum data volume for algorithmic optimisation. Google Ads campaigns in competitive categories routinely require monthly budgets of $1,500 – $5,000 USD to generate statistically meaningful insights. These are not aspirational figures. They are operational requirements.

It is also important to note that budget is not the only variable. Strategy, execution quality, audience targeting, creative development, and measurement infrastructure all determine the return on any given investment. But none of those variables can compensate for investment that is structurally insufficient. Strategy without budget is theory. Execution without resources is improvisation.

The Strategic Case for Spending Through the Downturn.

The historical evidence on marketing investment during economic downturns is among the most consistent findings in marketing effectiveness research, and it deserves to be stated plainly.

During the Great Depression, Kellogg’s doubled its advertising spend while competitor Post retreated. Kellogg’s emerged as the dominant cereal brand and held that position for decades. During the 1990s recession, Taco Bell and Pizza Hut maintained and increased their marketing while McDonald’s cut. Taco Bell’s sales increased 61% and Pizza Hut’s increased 40%. McDonald’s sales declined 28% (GRIN, 2025). During the 2008 financial crisis, companies that maintained their marketing spend achieved a 17% compound growth rate; those that cut did not recover equivalent market position for years (ZoomMetrix, 2025).

The mechanism is not mysterious. When a competitor goes quiet, the space they vacate is available to those who remain present. Media costs often decline during downturns as demand from advertisers falls, meaning that the same budget achieves greater reach. Brand salience, the likelihood of being recalled at the moment of purchase, declines rapidly when communications cease and recovers slowly when they resume. The asymmetry is brutal: it is far cheaper to maintain presence than to rebuild it.

“Maintaining or increasing a brand’s share of voice relative to its share of market during a downturn leads to better long-term profitability.” — IPA Analysis, cited in Marketing Society (2008)

P&G’s response to the COVID-19 pandemic exemplifies this principle at scale. Recognising that media consumption would increase as consumers stayed home, and that competitors would retreat, P&G increased its advertising investment by nearly two percentage points as a share of sales in the third quarter of 2020. Revenues surged whilst competitors struggled (Criterion Global, 2025).

Marketing Is Not a Luxury.

The evidence reviewed here does not support the treatment of marketing as a discretionary expense that can be safely reduced when conditions become difficult. It supports the opposite conclusion: that marketing investment, maintained with discipline and calibrated to strategic objectives, is among the highest-return activities available to any organisation, and that its reduction, particularly in competitive markets and economic downturns, carries costs that frequently exceed the savings achieved.

The misperception that marketing lacks the tangible returns of other business functions is not the product of ignorance. It is the product of a temporal mismatch, between the time horizon on which marketing produces its effects and the quarterly reporting cycles on which most organisations are evaluated. Closing that gap requires a shift in how marketing investment is conceptualised: not as a cost to be managed, but as a capital asset to be built.

For business leaders and management teams navigating constrained budgets, the question is not whether to invest in marketing. It is how to invest with greater precision, greater accountability, and greater strategic intent. The organisations that have consistently emerged from downturns in stronger positions are those that understood this distinction, and acted accordingly.

For marketing consultants and strategists working with clients who arrive with impossible budgets and unrealistic expectations, the imperative is different but related: to make the case for adequate investment clearly, to evidence it rigorously, and to decline to allow under-resourcing to masquerade as strategy.

Marketing is not an optional function for organisations that wish to remain visible, relevant, and competitive. It is the work that makes visibility, relevance, and competitiveness possible. Treating it as anything less is not prudence. It is a deferred cost, and one that, when it falls due, is invariably more expensive than the investment it replaced.

References

• Analytic Partners. (cited in Trace Brand Building, 2025). Brand investment — the 72% growth advantage. Retrieved from https://www.tracebrandbuilding.com
• Aaker, D. A., & Jacobson, R. (2015). The evidence you need to justify brand investment. Prophet. Retrieved from https://prophet.com/2015/01/227-the-evidence-you-need-to-justify-brand-investment/
• Criterion Global. (2025). Marketing in a recession: What we’ve learned from past global economic emergencies. Retrieved from https://criterionglobal.com
• Digiday. (2022, October 28). Marketing budgets fall under heavy scrutiny as risk of prolonged slowdown in 2023 rises. Retrieved from https://digiday.com
• eMarketer. (2023, January 13). 30% of advertisers are cutting their 2023 budgets. Retrieved from https://www.emarketer.com
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